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Two optimistic traditions in the dismal science: rationalism and the "invisible hand"

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  • Stan du Plessis

    () (Department of Economics, University of Stellenbosch)

Abstract

This paper explores two traditions of optimism in economics. In one of these traditions optimism is based on the comprehension of a spontaneous (and often progressive) order in a decentralised (or market) economy – what I will call the optimism of the “invisible hand”. Against the optimism of the invisible hand stands another optimistic tradition in economics, whereby we might take courage from our ability to do right by society through instructing governments with the keen edge of our most enlightened plans. This tradition is called “constructivist rationalism” here. The paper explores the logic of each tradition and their historical development and applies both to a recent example of policy making in South Africa: government’s fundamental regulatory overhaul of the pharmaceutical industry based on the Medicines Act of 1997, specifically, the decision to implement price controls on medicines.

Suggested Citation

  • Stan du Plessis, 2007. "Two optimistic traditions in the dismal science: rationalism and the "invisible hand"," Working Papers 07/2007, Stellenbosch University, Department of Economics.
  • Handle: RePEc:sza:wpaper:wpapers38
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    File URL: https://www.ekon.sun.ac.za/wpapers/2007/wp072007/wp-07-2007.pdf
    File Function: First version, 2007
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    Cited by:

    1. Willem H. Boshoff, 2013. "Why define markets in competition cases?," Working Papers 10/2013, Stellenbosch University, Department of Economics.

    More about this item

    Keywords

    Spontaneous order; Modernism; Planning; Optimism; Information; Uncertainty; Price controls; Institutions; Constitutions; Law and Economics;

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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